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Inflation rises to 3.2 per cent

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Consumer price index inflation rose from 3.1 per cent to 3.2 per cent in October, well above the Bank of England’s target, according to the Office for National Statistics.

Retail price index inflation was 4.5 per cent. RPIX, which excludes mortgage interest payments, was unchanged at 4.6 per cent.

Bank of England governor Mervyn King will again be forced to write to the chancellor to explain why inflation is so high.
The Bank of England’s recent inflation report said the outlook for inflation remained notably uncertain.

The Bank of England would normally raise interest rates to cope with a rise in inflation, but so far economic uncertainty has precluded that possibility.

However, the figures make it less likely the Bank will embark on a second round of quantitative easing in the New Year.

The largest contributors to inflation included fuels, beverages, tobacco and financial services, where prices fell by less than a year ago.

The largest downward pressure on inflation came from food.

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